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i have a question in question 3b and 3c
How can i get the operating profit, finance costs,book value of equity and also the book value of debt?
Where can i get the figure of the dividend in doing the dividend valuation?
Operating profit: take the current 12,200 and add on 11% each year, as per the question.
Finance costs: Take the interest on the 8% bond (as calculated in the answer) and add on the interest of the $20M loan at 6%.
Book value of equity: This is explained in the note in the answer. It is the nominal value of the shares, plus the retained earnings each year.
Book value of debt: The closing 8% loan balance as calculated in the answer, plus the $20M 6% loan.
Dividends: The last paragraph of the question says that dividends will be 25% of the available earnings for the next 4 year, and that afterwards the growth rate in dividends will then fall by 60% from what it was before.
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